Tuesday, December 17, 2013

Facebook to Start Selling Video Ads -- Full WSJ Article

By Reed Albergotti, Ben Fritz and Suzanne Vranica
Facebook Inc. said it would begin selling video advertisements later this
week, a move that may help the social-networking giant capture a share of the
annual $66.4 billion TV advertising market.
The ads will start appearing Thursday both on the Web and on smartphones,
according to people familiar with the matter. They will play automatically in
users' news feeds--though the sound will be off, Facebook said Tuesday.
How long they will be is unknown. In August, The Wall Street Journal
reported Facebook planned to offer ads of up to 15 seconds on both smartphones
and the Web.
One of the first ads will be a short teaser--made specifically for
Facebook--for the coming Lions Gate Entertainment Corp. film "Divergent." It
isn't known how many other companies will offer ads in the early days.
Many advertisers had hoped Facebook would begin selling ads in time for
the holiday shopping season but Facebook delayed a launch fearing ads could
annoy users.
Some advertisers produced videos early in the year, anticipating a summer
rollout, and were frustrated when Facebook pushed back the launch. Other
advertisers worried ads might alienate users.
Facebook founder and Chief Executive Mark Zuckerberg took a personal
interest in the video ads and delayed their introduction in part because of
engineering problems that made them slow to load. In August, the Journal
reported Facebook software engineers improved the back-end technology to speed
up ads.
Last week, some Facebook users saw videos playing automatically in news
feed as Facebook began to test the technology.
Facebook said video ads playing on mobile devices would have been
downloaded in advance when the device was connected to WiFi--meaning this
content won't consume users' data plans.
It isn't clear how much Facebook will charge advertisers but it is likely
to be expensive. "We do not disclose pricing," Facebook said in a statement
Tuesday. "The goal for this test feature is to be a premium advertising format
on Facebook, intended to reach a large audience at specific times."
Executives told The Wall Street Journal in August Facebook planned to
charge $2 million a day to let advertisers reach the full Facebook audience of
adults aged 18 to 54.
"We expect video to be more expensive," said Dan Slagen, senior vice
president of marketing for Nanigans, a digital-marketing software company. "But
we're going to see advertisers willing to pay," he said on Monday.
Data-research firm eMarketer expects advertisers to spend $66.4 billion
on television in 2013.
The delayed rollout could prove profitable for Facebook because this time
of year advertisers can have excess money to spend. Traditionally, Facebook
hasn't been a go-to place for that money and video ads will make it a more
attractive destination, advertising industry experts said.
Write to Reed Albergotti at reed.albergotti@wsj.com, Ben Fritz at
ben.fritz@wsj.com and Suzanne Vranica at suzanne.vranica@wsj.com